1. Field of the Invention
The present invention relates to the field of media portfolio management and, in particular, to a system and method for optimizing media portfolio allocation.
2. Description of the Related Art
For a given product or service, there are many different media channels that can be used for marketing, such as television, social media, online banners, radio, etc. To optimize the investment strategy across a multitude of media channels, decision makers often estimate the effectiveness of the media channel when used to market the given product or service based on historical data. An optimal media portfolio is then determined based on the estimated effectiveness information of each media channel.
One drawback to such an approach is that the estimated effectiveness of a media channel may not be accurate. For example, emerging media channels (e.g., social media), the estimated effectiveness may indicate that emerging media channels are highly effective marketing tools but, because there is not a large amount of historical data supporting the estimated effectiveness, the estimation may be inaccurate. Additionally, the effectiveness of certain media channels may be estimated with high precision than other media channels, thus resulting in a skewed media portfolio optimization.
Decision makers often try to account for these estimation inaccuracies by imposing artificial limits when determining an optimized investment strategy across media channels. For example, in one scenario the investment in a particular media channel may not deviate more than 20% than the investment in the particular media channel in a current investment strategy. In another scenario, the percentage of the total investment in any one media channel is capped to account for risk. The artificial limits, however, are static and, therefore, do not directly account factors that affect the estimated effectiveness.
As the foregoing illustrates, there is a need in the art for a mechanism for optimizing investment strategy across a media portfolio that takes effectiveness estimation accuracies into account.